Study confirms Cradle Resources can mine rare super alloy cheaper, faster than planned
The team at Cradle Resources Ltd (ASX:CXX) has been told its plans to mine the super alloy niobium can be carried out at a lower cost and higher profit margin than first thought.
Niobium (Nb) is a key ingredient in high strength low alloy ‘super steel’ that is increasingly being used to build high end automobiles, bridges and buildings.
Adding niobium to steel makes the material lighter and stronger. It sells for around $40,000 a tonne. No new source of the material has come on stream since 1976.
Positive Scoping Study results
CXX has a 50% stake in a niobium project in Tanzania, called Panda Hill, which it wants to set up as a 2Mtpa open cut mine, making it the fourth largest supplier of Nb in the world.
The Scoping Study for the Panda Hill Project to assess its potential was completed by two independent mining companies and a number of specialist consultants.
The study found:
- CXX can set up a base case 2Mtpa mine for $185M – 19% cheaper than original estimates
- A staged mine development can be initiated for $125M with similar mine life economics
- Production costs for the base case mine can be kept to $16.67/kg – 58% below Nb’s selling price
- The base case mine can pay back its capex within three years, four and a half years for the staged case
Grant Davey, Managing Director of CXX, says the results far exceeded the management team’s expectations. “The next phase of the study will focus on reducing operating costs, optimising capital and de-risking and growing the niobium resource,” he says. “As the study progresses I gain confidence that Panda Hill will be the first highly profitable world class niobium mine in Africa.”
Metallurgy testing shows high grade
Minerology test work has also been carried out on samples of CXX’s Tanzanian Nb by a Canadian laboratory. The samples were taken from an area of Panda Hill known as the weathered cap and show Nb can recovered at a comparable rate to the three existing global producers.
The tests showed the maximum potential Nb recovery is comparable to the rest of the industry’s average.
All these test results are encouraging CXX to press ahead with its plans to bring Panda Hill into production. A pre-feasibility study for the project is next on the list and CXX’s management team is concentrating on raising more capital to support the next phase of development.